And then next, one of the more recent Warren Buffett additions to his portfolio, IBM, which reported numbers on Thursday evening last week. Which, in trader speak, is a lifetime ago. It depends whether you watched that funny movie last evening, four dream levels deep, as long term investors we are stuck in the deepest dream level. Big Blue, as IBM is known, celebrated 100 years of existence last year, ironic that the Oracle of Omaha took that year to finally make an investment. After having read the annual report and following the company for 50 years, only then was he happy. Wow. This business offers their clients full end to end solutions, from the hardware and software through to their services businesses. And everything in between of course. Straight into the performance, diluted EPS up 11 percent to 4.62 Dollars per share for Q4. For the full year the company managed to earn 13.06 Dollars per share, as they point out up double digit for the ninth consecutive year. Now for the full year, revenues up 7 percent to 106.9 billion Dollars, net income up 7 percent to 15.9 billion Dollars. Dividends of 75 US cents per share for the quarter, that translates to 3.00 for the year.

Check out revenue contribution by geography:

As you can see the developing markets are the big contributors, BRIC countries increased a whopping 19 percent, that is big. But that is all very nice, the stock currently is hardly expensive, it trades on 14.41 times earnings and yields 1.59 percent historically. OK, that is not a great yield, but the stock seems cheap enough. I think the commentary that I have heard obviously resonated with the Oracle of Omaha, and I saw in a presentation, quite an interesting graphic of how all the IT companies have positioned themselves. What is most interesting from this presentation (watch it if you have a spare few minutes -> Business Perspective, September 2011) is that IBM has a five year plan. That was the part Buffy liked. Buffy the stock slayer, not the other one.

So IBM obviously sees themselves in the high value and large enterprise segment. It is not actually a surprise that the two that find themselves in the bottom left quadrant are HP and Dell. I must admit, I admire the company, I think the valuations are really cheap and suspect that you could comfortably own the stock. You cannot own everything, but if you are searching for another tech stock outside of our core, Cisco, Apple, Google and Visa (payment systems), do not look any further than IBM.

Sasha Naryshkine at Vestact

Tags: #IBM